It is the Christmas season, and one of my favorite carols is the 12 Days of Christmas. I like it because it is a fun song about the twelve things that “My true love gave to me,” over the twelve days that lead up to Christmas day. Well, including today there are now twelve days until our country flies off the “fiscal cliff” like Thelma and Louise in their Thunderbird. Oh how seasonally appropriate our illustrious leaders are, it is the Twelve Days of Cliffmas.
I haven’t written much about this fast approaching cliff, in fact I have only written twice before about it (here and here), partly because I look at it this way: What we are told are the calamitous things that will lead to America’s utter ruin – higher taxes AND government spending cuts – are actually the things that needs to be done to start bringing our country’s fiscal house in order. Notice I said “start bringing,” NOT actually bringing our fiscal house in order. This is because the financial balance sheet of our country is so completely out of whack that even if we don’t go over this cliff there is a bottomless pit further down the road.
Would going over this cliff hurt? More than likely it would; though temporarily. There could be certain economic repercussions if we clutch our hands together, and drive our classic Ford Thunderbird over the edge. Our economy might enter another recession (if we actually ever left the last one). Government programs would be reduced, which could lead to a reduction in services to some people. Nonetheless I still believe that if there aren’t substantive reductions in government spending, along with a marginal increase in revenue, then the fiscal cliff will be the least of our concerns – and those concerns would probably come sooner rather than later.
Nearly a third of every dollar that the government spends is put on Uncle Sam’s credit card (which is actually ALL of our credit credit). That is to say that a third of our money spent is borrowed money. Anyone who has ever taken out a loan of any kind, which is borrowing money, knows that that money has to be paid back, with interest; and we are piling more debt onto the existing debt; at a rate of about $4 billion per day. Yeah, that sounds sane and sustainable – if you live in bizzaro land.
Currently 6% of our government’s budget goes towards just paying the interest on the national debt. Not paying the debt down, but simply paying the interest on the debt. Given that we are simply pouring more money on to our over $16 trillion in debt, I can assure you that that seemingly small 6% budgetary allocation for interest payments (which equates to $230 billion in interest only payments) will certainly grow in size. Look at that $230 billion dollar number, and see what it is spent on. It is essentially being flushed down the toilet because it isn’t going to anything but interest. It isn’t being spent on anything of any substance, like repairing/updating infrastructure, or improving services, or even reducing the debt; it is simply being wasted. Should we start to worry about that “paltry” 6% when it becomes 7, 8 9, 10% of our budget? Maybe we should just ask Santa Claus for a $16 trillion Christmas miracle? By the way, I would be remiss if I didn’t mention that $16 trillion is over four times the size of the entire US government budget, and it would take every man, woman and child to cough up nearly $60,000 to pay it off. Do you have your $60,000 share? I know I’m not even close.
So, here we are 12 days and counting until fiscal “Cliffmas,” and despite all of the news outlets telling us how dire this situation is, I see it as a mere pothole compared to what lies beyond it. However, I do believe there will be some sort of eleventh hour deal reached, just as there was when the deal was made on raising the debt ceiling in 2011. A deal which ironically comprised of all of the tax hike and budget cutting measures that we just cannot have or we will plunge off this fiscal cliff. Ah, Washington DC. A fanciful place where solutions equate to more problems, which then needs more solutions, which will certainly create more problems; and so on and so forth. It is truly a fanciful place indeed, just like Santa’s Workshop. The big difference between Santa’s Workshop and Washington DC though are the problems that arise from all of those solutions in Washington are certainly someone else’s fault; while in Santa’s Workshop everything is solved with magic and elves.
The cynic in me is very curious as to what this eleventh hour solution, err problem, um whatever, could/will be. However, as I do live and pay taxes in this country, like a good “economic patriot,” and all of my family and friends live here too, as such I am legitimately concerned as to what the long term (may not be that long) impact of this solution/problem will have on this, my country, and my home. I have a bigger belief in Santa Claus than I do in the government actually addressing the bigger and more threatening problems facing our country; which is the often talked about and talked to $16 trillion debt. The thing is though talk is cheap – though it will get you reelected – actions have always spoke louder than words, sadly though, Santa is a (fictional) man of action, while a politician is a person of words.
The fellow that can only see a week ahead is always the popular fellow, for he is looking with the crowd. But the one that can see years ahead, he has a telescope but he can’t make anybody believe that he has it. (Will Rogers)
Be thankful we’re not getting all the government we’re paying for. (Will Rogers)